Keeping Compliance in Check

November 2009

A velvet rope, burly bouncers and long lines of faux and facade. One might imagine this to be just another night at the hottest scene on the Sunset Strip. Rather, this is now just a typical sight at many of the casino resorts on the Las Vegas Strip. Nightclubs have quickly become instrumental for Vegas casino resorts to ensure they continue to attract a younger demographic. Recent events at nightclubs, ultra lounges and pools, however, have revived the question of how much oversight Nevada’s gaming statutes and regulations require licensees to provide for non-gaming venues located on their premises.

In February 2006, the Nevada Gaming Control Board (GCB) issued a memorandum to all non-restricted licensees regarding their entertainment and nightclubs. The impetus for the memorandum was events related to nightclub activities and entertainment choices that were reportedly occurring “on or within the property of gaming licensees.” These events included excessive inebriation, drug distribution and abuse, violence, presence and serving of minors, and the handling of those individuals who become incapacitated while at nightclubs.

In April of this year, the board again addressed recent indiscretions in an “Industry Letter” and further detailed the licensees’ responsibilities for nightclubs, ultra lounges, European pools and similar venues. The board had received complaints regarding activities at venues located on the premises of various licensees and found in some cases that licensees were “indifferent to the conduct or welfare of patrons.” Date rape, extortion/misquoting of service charges, restricting access by law enforcement, lack of coordination with licensee security, and prostitution were a few of the activities reported to have occurred.

The April 2009 Industry Letter acknowledged that licensees are likely to have contracted with a third-party company to operate these venues and the extent of licensee involvement in venue operations varies. Nevertheless, the Industry Letter emphasized that licensees bear ultimate responsibility for ensuring all operations on their premises are conducted “in accordance with all applicable laws and regulations and in a manner that does not reflect badly on the State of Nevada or its gaming industry.” Board member Randy Sayre clearly reiterated this point at the board’s informational seminar recently held in Las Vegas. “We measure results,” Sayre said. “You could have the tightest contract on the face of the Earth … but if the property is not willing to take the necessary steps to enforce their rights, that’s an issue (for the board).” This article speaks to how non-gaming venues are regulated in Nevada and what a venue operator and a licensee must do to ensure non-gaming venues located on the premises of a gaming establishment are compliant with federal, state and local laws.